New report calls for clearer guidance, smart tools to help businesses prepare for major shift
More than half of employers across Australia are still unaware of the upcoming Payday Super, according to a new report, despite the major shift to superannuation payments taking effect starting from July.
New findings from Employment Hero revealed a critical knowledge gap among employers on the upcoming Payday Super, highlighting the lack of readiness ahead of its looming implementation.
According to the report, 58% of Australian businesses are not aware of any legislative changes coming into effect this year.
"Despite the scale of the system, awareness of upcoming changes to super remains limited," the report read. "More importantly, even where awareness exists, understanding is thin."
Half of employers who have heard about Payday Super cited the media as their most common source.
"That coverage is helping surface the existence of the change, but it isn't consistently translating what it means in practice, including timing, expectations, and what 'on-time' contributions will look like under the new ATO requirements," the report read.
But the lack of awareness of Payday Super is not rooted in employers' unwillingness to learn, according to Rob Dunn, Employment Hero general manager, superannuation and benefits.
"Businesses need clearer guidance and smarter tools to get ready in time," Dunn said.
"The right payroll and payments solution will not only help businesses stay compliant, but also better position them to attract and retain talent in a market where employees increasingly expect visibility over their entitlements."
Further super challenges
Australia's Payday Super mandate will require employers to pay their employees' super with every pay cycle, following data that showed millions of Australians are missing out on billions of super entitlements.
But as super becomes more time-sensitive and visible, long-standing gaps in the process are also coming into focus.
The majority of businesses (84%) in Employment Hero's report noted at least one frustration with the current super process.
It found that the biggest pain point is not on the scheduled payments, but what happens when something goes wrong. Among the commonly cited frustrations are:
- Returned funds due to errors (63%)
- Number of manual steps involved (60%)
The timing of cash flows is also expected to bring about financial risks for organisations.
A model from Employment Hero showed that an average small business would need an additional $124,000 in working capital to meet the new timing requirements of Payday Super.
Two in five businesses in the report even said they may need credit or financing to support them.
The findings echo what pay experts warned earlier this year, saying that Payday Super removes the "unofficial cash buffer" for thousands of employers in Australia.
"If you run weekly or fortnightly payroll but get paid by customers on more than 30-day terms, you suddenly have a liquidity mismatch, which is a huge challenge for any business," James Beeson, CEO of working capital specialists Earlypay, previously said.
Christopher White, CEO of specialised business services company Pay Australia, advised employers to get specialist advice early.
"Talk to your payroll provider, accountant or finance broker to model the cash impact," White previously suggested. "With the right plan, SMEs can tighten debtor processes, line up funding if needed, and avoid last-minute disruption and penalties."
